U.S. solar companies seen having weaker Q1

NathalieTadena

TAKING THE PULSE: Solar-panel makers are projected to post weaker first-quarter results as the solar-power industry continues to struggle with uncertainty over government subsidies and fierce competition from low-priced Chinese manufacturers.

The sector has for several quarters now been hurt by a global oversupply of solar panels and cuts to renewable-energy subsidies in key European countries, resulting in weakened demand and a sharp decline in prices of solar products. These industry woes have sent shares of solar-products makers sliding over the past year. Several U.S. and European solar companies, among them Solyndra LLC, have also been forced to file for bankruptcy.

Many companies are looking to restructure their businesses and move towards new markets where they can be more competitive. In March, the U.S. Commerce Department slapped modest tariffs on imports of Chinese solar panels, giving a partial victory to solar-equipment manufacturers in the U.S., some of whom have accused Chinese rivals of dumping and obtaining unfair government subsidies. Chinese solar-panel makers such as Suntech Power Holdings Co.
STP, -1.32%
Trina Solar Ltd.
TSL, -2.23%
and Yingli Green Energy Holding Co. Ltd.
YGE
have denied the allegations in two related cases that are still pending and could lead to additional tariffs.

Wall Street Expectations: U.S.-based First Solar is expected to post earnings of 59 cents a share on revenue of $688 million, according to analysts polled by Thomson Reuters. A year ago, the company posted a per-share profit of $1.33 on revenue of $567 million.

Key Issues: First Solar, which has been one of the world's top solar-panel suppliers in recent years, recently said it will close its German factory, cut production at its factory complex in Malaysia and trim almost a third of its work force--a sign that falling prices and a global oversupply of solar panels have increasingly taken a toll on the company. First Solar is focused on building large solar farms, rather than smaller rooftop solar systems, which has raised concerns among some analysts that the company isn't well positioned to take advantage of the higher prices in the rooftop solar market. The company cut its full-year revenue view for 2012 in February.

Wall Street Expectations: SunPower is expected to report a loss of 15 cents a share and revenue of $525 million. Last year, the company reported a loss of 2 cents a share, but excluding stock-based compensation and other impacts, the company's year-ago profit was 15 cents a share. SunPower posted revenue of $451 million last year.

Key Issues: U.S.-based SunPower, which is majority-owned by French oil major Total S.A. (TOT, FP.FR), has taken steps to keep up with a rapidly changing market by cutting costs and looking for new markets, like the Middle East where it can compete on cost with fossil-fuel power generations. The solar-panel maker also has several large solar farms under construction. In November, SunPower unveiled plans for a broader reorganization that included a shuffling of executives and earlier this month, said it would consolidate its Philippines manufacturing operations. The company has said it aims to break even or book a profit in 2012 and expects panel prices to stabilize or fall at a slower rate than last year. SunPower plans to book $186 million in revenue for the latest quarter for a large California solar farm that it started building last fall for NRG Energy Inc. (NRG).

Suntech Power Holdings Co.
STP, -1.32%
- reporting date to be announced

Wall Street Expectations: The producer of photovoltaic panels is projected to report a loss of 50 cents an American depositary share on revenue of $411 million. Last year, Suntech reported a profit of 17 cents per ADS and revenue of $877 million.

Key Issues: China-based Suntech, which posted losses in the past three quarters, has said it expects first-quarter shipments to decline by 30% from the prior quarter, due to softer seasonal demand. The company also anticipates lower margins for the period. Suntech has warned that it expects excess manufacturing capacity and further policy changes in the U.S. and Europe to continue pressuring the industry. Analysts have expressed concerns about the company's large debt and high costs.

Wall Street Expectations: The solar-panel maker is expected to post a loss of 29 cents per ADS on revenue of $396 million. Last year, Trina reported earnings of 63 cents per ADS, which included a currency-exchange loss of 30 cents, and revenue of $550.9 million.

Key Issues: When Trina reported a fourth-quarter loss that was wider than analysts expected in February, the China-based company noted that growth in worldwide solar-panel manufacturing capacity and inventories resulted in significantly lower prices. However, Trina Chief Executive Jifan Gao told Dow Jones Newswires in March that the company expects to see good returns from the U.S. market this year, despite the trade row over alleged subsidies and dumping. Gao said he expects sales of solar equipment to the Americas this year to reach 20% of Trina's total sales and also said he expects sales to Japan to "grow aggressively" this year.

Wall Street Expectations: Analysts expect Yingli to post a loss of 21 cents per ADS on revenue of $449 million. Last year, Yingli reported a profit of 38 cents per ADS-excluding share-based compensation-and revenue of $527.3 million. The prior-year figures are based on currency conversions at that time.

Key Issues: Heavy write-downs and plunging solar panel prices pushed the Chinese solar panel manufacturer into the red in the fourth quarter. However, the company is anticipating stronger demand in 2012 and expects to boost shipments this year by 50% from last year. The firm is also targeting regions in emerging markets, such as the Middle East and Africa. Chief Executive Miao Liansheng told Dow Jones Newswires in March that the company expects China to overtake Europe as its top customer this year. Yingli said it is hedging as much as 30% of its overseas revenue to protect against currency fluctuations and an appreciating yuan.

(The Thomson Reuters estimates and year-earlier results may not be comparable because of one-time items and other adjustments.)

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